Restaurants failing 50% more than during recession
Restaurants are failing at a 50% higher rate than during the recession, new figures suggest today.
More than 1,290 restaurants became insolvent in the year 2014-15, a significant rise from the 865 that went out of business in 2009-10, according to a report from accountancy firm Moore Stephens. This is also an increase compared with 2013-14, with failure rates having jumped 20% from the 1,082 insolvent outlets of that year.
Moore Stephens blamed increasing competition, market saturation, rising rents, increased innovation, wage bills and rising operational costs for the failures, which occurred even despite a boost in consumer confidence and spending power in the past few years.
It also said that expansion of existing brands backed by private equity investment was making it more difficult for independent and privately-owned businesses to compete, and noted that a shortage of chefs was hitting restaurants, which might be incurring higher costs in their bid to recruit the best staff or employ agency chefs.
The report considered traditional restaurants as well as pop-ups and street food operators, who might, it said, struggle to build on an initial buzz of success.
High profile restaurants to have gone bust recently included four of Marco Pierre White's pubs, and Swiftsure Projects, the firm behind last year's MasterChef pop-up restaurant, which collapsed despite the event reportedly selling out within days.
Steve Ramsbottom, restructuring and insolvency partner at Moore Stephens said: "You don't expect to see restaurants failing at their fastest rate in years in a rebounding economy. The buzz surrounding innovative new food and restaurant concepts may be a big draw, encouraging people to have a go, but the inexperienced can get out of their depth very quickly."
He added: "As new, trendy eateries open up in towns and cities, existing restaurants and food outlets, which may seem less exciting and inviting by comparison, are inevitably at risk of getting edged out."
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